Province pursues P3s
By Laurene Clark

The provincial government¹s actions currently give a clear message to both
public and private sectors < money allocated to fund infrastructure now
comes at a price. By placing its own ministries and agencies on notice that
they will have to finance major capital projects out of their operating
budgets, the government is clear about its intention to look for innovative
funding and partnerships.

The cornerstone of provincial government¹s innovation for capital projects
is the pursuit of public/private partnerships or P3s. Transferring risk,
liability and opportunities associated with the
development of projects and, in some cases, the delivery of services is the
objective. The government has said it will establish a new
organization to direct its public/private partnership efforts with a
mandate to be a Osingle window¹ into government. This new agency will be
part of government itself < by government, for government.

Logically, government focus on P3s means that it will require in-house
expertise. After ten years of government funding capital projects, it
admittedly has much to learn about private/public partnerships and risk
sharing. In its efforts to build experience in-house, it recently sent
senior bureaucrats on a scouting expedition to the United Kingdom, where P3s
are more common.

What did they learn? P3s require cautious planning. If partnerships are not
structured carefully and competently, P3s can Ogo south¹ very quickly with
negative ramifications for everyone involved. As well, transaction costs can
be astronomical. Lawyers¹ fees on a P3 hospital project located in the UK
quickly compounded to over £8 million. However, while caution is a
necessity, there is no need to re-invent the process; a lesson can be
learned from each example. Exemplary partnerships from other jurisdictions
exist to teach us the qualities and routes of implementation for successful
P3s. And, we already have examples in Canada and British Columbia.

To ease public confusion and private sector reticence, the government needs
initial and enduring success with model P3 projects. One could expect that
the new government organization will work with ministries on these large
projects. However, it is unlikely that the proposed new group will have the
resources to reduce duplication of effort, transaction costs and lend
expertise to a greater community of stakeholders for smaller projects or
service-oriented proposals.

Business knows it needs to deliver P3 competence for government. And
government needs to recognize that success will involve championing P3
capability within the province. British Columbia businesses can and should
lead projects at home and worldwide. The most important factor in a
successful partnership is trust and now is the time for provincial
government to invite the private sector to
participate in the P3 process!